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Law that jailed cash mule is still an ass, whenever it was passed

Jake van der Kamp

BIO

Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.

Van der Kamp is wrong when he says that the [money laundering] offence was only passed last year. The legislation passed last year concerns the obligation for customer due diligence and record keeping.

Kevin P. Zervos, Director of Public ProsecutionsLetters to the Editor, March 21

He's right. I got it wrong. It was already a crime in 1995, even before the handover, to be suspected of having committed a crime. I now have another count of maladministration to hold against former governor Chris Patten. In excuse of my own fault, I can only say that a Jack of all trades is a master of none, and a financial columnist is certainly a Jack of all trades.

One day it's mobile phone licence renewal conditions, the next day the MTR's fare-setting mechanism, the following day our mortgage delinquency rates and then a money-laundering law that we borrowed from the Spanish Inquisition.

Along the way I got my dates wrong. Mea culpa.

And now let's deal with the excuses that Mr Zervos has dished out to us for a rank miscarriage of justice in sending a little old lady to jail for 10 years on a grossly misconceived charge of money laundering.

The trouble with most lawyers is that once they stick their heads into a courtroom they never seem to take them out again. It means that they rarely make better than fourth-rate politicians. They do worse, much worse in understanding anything of commerce.

What you must bear in mind, Mr Zervos, is that across the border we have a government that wishes to keep a tight control over economic affairs and thus forbids anyone from moving money in or out except with its explicit permission.

This actually isn't very good for the economy and thus, in order to keep the wheels of the economy greased, Beijing not only looks the other way when its princes take their money across the border but also allows us to scrub clean HK$3.5 trillion a year of trade proceeds by calling them re-exports.

Along the way it isn't hugely disturbed if the Shenzen underground banking system shuffles cash back and forth with Hong Kong for day-to-day business needs. The Closer Economic Partnership Arrangement (Cepa) has failed. This takes its place.

But, of course, Beijing can never officially admit this or be confronted with the evidence that it condones a breach of its own rules. The underground system therefore employs cash couriers. These people continually go back and forth across the border, carrying small amounts of cash for deposit in Hong Kong, where it is massed into larger payment sums.

It is what the little old lady in question here was probably doing. It's not the way drug lords, terrorists and tax evaders launder money but we cannot be sure quite what she was doing as Mr Zervos' prosecutors adduced no evidence of any underlying crime.

They don't have to. Our money-laundering law makes it a crime to be suspected of a crime, and this second crime need not be identified. It is good enough that any right-thinking member of the community can reasonably believe from the way the money was handled that it constituted the proceeds of a crime, whether it did or not.

In practice in a courtroom, "right-thinking member of the community" means what a lawyer thinks, and lawyers, unfortunately, do not think very well in matters of commerce.

So let's say it again. If this little old lady was simply a cash shuffler for the Shenzhen underground banking system then she did nothing wrong here. Yet she was sent to jail for 10 years, which is a gross miscarriage of justice.

What makes it worse is that this case leaves Mr Zervos and his department open to suspicion of pandering to a rather sinister and unregulated European police authority, the Financial Action Task Force.

FATF threatens to make international payments difficult for our banks if we do not meet its expectations of high prosecution and conviction rates and long prison sentences for money laundering.

It's simple, Mr Zervos. Your money-laundering law is a mockery of justice, this conviction is unsafe and this woman ought to be sprung out of jail immediately.

Jake is spot on here. Regardless of any ethical or moral implications (such as the facilitation of the movement of HKD 6.4 billion or her work as an underground money changer), it stands beyond any doubt that the woman in question did not violate any Hong Kong law. She has been convicted on the suspicion of a crime, and not the actual commission of a crime.

mymak Mar 24th 20133:40pm

Listen to all you guys below. 22,000 deposits and 17,000 withdrawals. The problem I have is that you seem to believe you are right in making a moral stand here. As a teacher of young people in Hong Kong what should I tell them tomorrow. If you get the chance to funnel money from an unknown source through multiple bank accounts but you weren't directly involved in prostitution, drug smuggling or other crimes then go ahead and do it. Don't stop and think. Where is all this money coming from? Why do these people need me to do this? Ridiculous!
You guys don't seem to understand the problem here. It is not only the Government that needs to provide some proof of guilt but also the defendent needs to provide some evidence of innocence. Sure, the law is not wonderful and the Prosecution Department has not done a great job, but ask yourself honestly - do you think that someone with almost 40,000 transactions involving billions of dollars and resident in Government housing is innocent? Morality please, not herd mentality.

kingsleyhk Mar 24th 201310:22am

Jake,There's an old music hall song (Victorian? Edwardian?) which has many versions - some of the less elegant ones will probably be sung in post-7s celebrations. What all versions I have ever heard have in common are the last lines:It's the same the whole world over
It's the poor what gets the blame
It's the rich what gets the pleasure
Ain't it all a bloomin' shame?T'was ever thus.Regards,Kingsley

mymak Mar 24th 20138:11am

Just a simple question from an ordinary member of the public. How much cash exactly went through the accounts of this 'little old lady'? You seem to be proposing a law that allows the masterminds to use little old ladies and for the little old ladies to be free from responsibility. I know it's a sensitive subject but be careful with constantly proposing legislation that will create more chances for money launderers.
Let's be clear here, if she was a 'cash shuffler' for the Shenzhen underground then she broke the law. The problem appears to be one of proving that she did so. Criminals, Jake, are not as stupid as you seem to be proposing.
I am shocked by the number of Hong Kong people who seem to want to be like White Knights riding to the rescue of little old ladies. Given the amounts involved the litle old lady must surely at one time have been a prosperous business woman and should therefore be able to provide detailed accounts showing where the money came from. Failure to keep proper business accounts and pay the tax thereon is a criminal offence.

"Failure to keep proper business accounts and pay the tax thereon is a criminal offence" True, but 10 years for it?
As Jake mentioned, it is an offense in China to transfer money in and out of China but it is not so in HK.
22,000 deposit and 17,000 withdrawal, if it is drug, prostituition or fraud, not a single one can be pusued?

No one is claiming little old ladies should be free from responsibility. But if she is suspected of committing or facilitating some sort of serious underlying crime (and that IS the implication here -- people do not go to prison for 10 years for poor bookkeeping), the burden should be on the prosecutor to prove it.

caractacus Mar 25th 20132:06am

The charge was not misconceived, though the length of the sentences may have been excessive, which by the way, were imposed by judges, not the DoJ. The real problem here is that the real controllers of the money never seem to appear in the dock, but that is not under the control of Kevin Zervos. He does not have the powers of a US District Attorney who tells the law enforcers who to go after. Your are firing your bullets at the wrong target. Look behind the scenes and examine the rotten political system which rewards and protects the likes of crooked property developers and bankers, but of course, our tame media doesn't have the guts, talent or energy to do any real investigative journalism into where the corruption really lies.